Follow by Email

Monday, July 21, 2014

4 Secrets to Starting a Company Without a penny

So you have the Big Idea. You have the passion. You have the business
plan. You can see your future success. All you need now is money in the
bank, right?
Probably nine out of 10 startups are where you are, in need of
operating capital. There’s no question ample cash reserves make
launching a new business considerably easier, yet it’s possible to
bootstrap a product, even a company, without investors or a big credit
line.
Focus, energy and determination are critical to entrepreneurial
success—but so is knowledge. After starting multiple companies from
scratch, here are four of the most important insights I’ve gained:

1. Iteration is your most critical resource. Of
course you need a strong core concept in place but that’s just the
beginning. You must iterate from your original idea to overcome
roadblocks, recover from and failures and capitalize on opportunities.
Mark Zuckerberg’s first website was shut down by Harvard. Sir James
Dyson developed over 5,000 vacuum cleaner prototypes before he got one
right. Henry Ford didn’t succeed in the automobile business until his
fourth time around. And we’ve all read that it took 1,000 (or was it
10,000?) attempts before Thomas Edison invented the light bulb.
Business models rarely survive in their original form. Stay fixed on
your initial mission but flexible how you get there. Don’t be afraid to
change directions or explore new avenues quickly. Let the market dictate
your path, and iterate to success.

2. Establish a comfort level with your prospects. Just
because you have a great idea doesn’t guarantee your prospective
customers will embrace it, or you. Particularly in specialized fields,
it’s important to develop a persona, image and business culture that
puts your buyers at ease.
In the earliest stages, many startups find it necessary to “act as
if” by creating the impression of a more substantial company. That’s
great but it may be smart to do just the opposite, especially if your
success depends on other small businesses. A scrappy reputation may be
more appropriate.

Remember that image isn’t just about your website or business card.
Interact with practitioners in your target field whenever you can.
Listen carefully, picking up on both the jargon and the business needs.
“Become” your prospect and you’ll have the rapport necessary to land the
sale.

3. Hustling is more valuable than cash. "Life
hacking'' is a popular buzz phrase these days. One of the arguments in
life hacking is that quality of work is more important than quantity.
While that’s true to some extent, I’ve found that quality comes from quantity. Practice makes better.
It’s simply a fact of life that investors are attracted to success.
They will invest in a startup, as long as the founder has a track
record. If you don’t have that kind of entrepreneurial resume, your
“seed capital” has to be personal drive.

That this is not necessarily bad. Hard work can prove, or disprove,
the validity of an idea. Without putting serious capital at risk,
hustling will demonstrate “progress,” which is more valuable than
“promise.” Investors are always more attracted to progress over promise,
so hustle.

4. Profits cure all. There’s no better way to create
and maintain control of your destiny than to become profitable as early
as possible. Profit creates leverage, and it’s leverage that leads to
control.
Zynga, in the early days, accepted lower quality advertising that
provided the company with the much-needed cash flow to become profitable
nearly from Day One. Zynga has since backed off from its liberal
advertising policies but that early proof-of-concept through
profitability helped Zynga, now a billion-dollar enterprise, provided
them with leverage to raise capital on their terms and retain control.

Not every business can begin operations with zero seed capital but in
our digital age barriers to entry are reduced and playing fields
leveled. It’s easier than ever to get an idea in front of potential
customers. The business world today favors companies with imagination,
ambition and the willingness to adapt. If you have the vision and a
plan, go for it. Don’t wait for the money.